beirut, lebanon july 5, 2007

1

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

Beirut, LebanonJuly 5, 2007

Infrastructure & Privatization Inter-Ministerial Committee Progress Report # 2

PRESENTATION

2

Today’s objective is to update your Excellencies on progress to-date, endorse the Telecom and Power Sector Programs, discuss the Ministry of Transport and CDR’s plans, and highlight key issues

Meeting Objectives

Brief your Excellencies on the status of issues raised in the previous IMC and on progress to-date of GR PCO planning and monitoring activities

– In the last IMC, 5 main issues were raised regarding the Power, Telecom and Transport Sectors: To-date, 2 issues were resolved, 2 are in progress, and 1 is delayed (details in appendix)

Highlight progress and status in each sector (where available):

– Paris III Program Milestones (2007 and 2008)

– Short Term Technical Assistance Requirement

– Short Term Initiatives Implementation Progress and Issues

Endorse the Telecom and Power Sector Programs

Agree on the prioritization of the proposed Transport initiatives

Discuss CDR engagement under Paris III

3

The Paris III implementation planning process is generally on track – Delays could occur in the Power and Transport sectors

Natural Owner Identification of Initiatives

Prioritization of Initiatives

Program Charters

Development

KPIs Setting

Natural Owner Review

Immediate Next Steps

Ministry of Telecom ✓ ✓ ✓

Develop KPIs Review and finalize Program Charters with

Minister of Telecom

HCP ✓ ✓ ✓ ✓ Develop KPIs

TRA ✓ ✓ ✓ ✓ Develop KPIs

Ministry of Energy and Water / EDL

✓ ✓ Develop program charters and detailed

workplans for short term initiatives

Ministry of Transport

50% 50%

Discuss privatization roadmap with Minister of Transport and agree on short-list of initiatives

CDR ✓ 50%

Follow-up on procurement and public investment programs

Agree on prioritization of initiatives Develop program charters for short term

initiatives

Progress To-date

Infrastructure & Privatization IMC Progress To-date

4

A Telecom Sector Corporatization & Privatization plan, structured along three main streams, has been endorsed by all stakeholders

Telecom Sector Corporatization/ Privatization – Program Milestones

Establish the Telecom

Regulatory Authority (TRA)

Corporatize Liban Telecom

Privatize Mobile Sector

TRA created and Board appointed

Decrees to facilitate the operations of TRA issued

All regulatory functions transferred to TRA

2007 Milestones 2008 Milestones

Liban Telecom established and Board or alternate governance structure appointed

Restructuring Program Management Office (PMO) created

Liban Telecom organization structure formalized Provisional opening balance setup, and Liban

Telecom budget transferred

Business support systems and marketing plan implemented

Customers and vendors contracts migrated LT brand created and Web presence established Employees migrated to new organization Mobile License for Liban Telecom issued Liban Telecom officially launched

Key regulations issued Financial, technical, and legal due diligence

performed Auction rules and procedures for sale of assets /

licenses finalized License/ privatization auction launched Termination notice sent to existing operators

1

2

3

Telecom Sector

Note: Program Charters and initiatives in Appendix

5

However, progress is obstructed by a slow process in transferring documentation to TRA, absence of a governance body for Liban Telecom, and delays in finalizing legal opinion on asset transfer

Telecom Sector Corporatization/ Privatization – Short Term Initiatives Progress and Issues

Telecom Sector


Regulatory Authority (TRA)

Corporatize Liban Telecom


1

2

3

TRA was established and Board appointed Decrees to facilitate TRA operations are being

issued TRA regulatory functions defined

Progress on Short Term Initiatives

Need to speed-up the process in transferring documentation and information (e.g., Radio Frequency, Licensing, Authorizations, Studies) from MoT to TRA

Issues

Decree # 13944 establishing and capitalizing Liban Telecom issued

Need to appoint Liban Telecom Board of Directors or alternative governance structure, and to assign PMO Members

TRA issued 3 mobile telecom regulations (SMP, Interconnection, and Consumer Affairs)

Valuation of licenses and legal due diligence in progress

Tendering for financial and technical due diligence advisors in progress

Legal opinion on ways to proceed with the privatization of mobile telecom assets, based on Privatization Law, sent to MoJ for review

Need to speed-up the process in finalizing decision on the available options regarding assets transfer (sale vs. lease) – Currently, legal opinions developed by HCP’s and TRA’s advisors, have been sent by the Minister of Telecom to the Department of Legal Administration at the Ministry of Justice for final verdict

6

Once key issues are resolved, Telecom Sector Natural Owners will need technical assistance support of around $3.3 million to achieve short term milestones

Telecom Sector Corporatization & Privatization Short Term Technical Assistance Requirement(Pre-November 2007)

Telecom Sector

Programs Milestones Budget Items Amount Total Budget


Regulatory Authority

TRA created and Board appointed Decrees to facilitate the operations

of TRA issued All regulatory functions transferred

to TRA

- - -

Corporatize Liban

Telecom

LT established and Board or alternate governance structure appointed

PMO created LT organization structure created Provisional opening balance setup,

and LT budget transferred

Advisory support for restructuring implementation

Auditing of LT – Auditor fees

Developing new brand for Liban Telecom – PR consultants fees

$ TBD

$ 1,000,000

$ 50,000

$ 1,050,000


Mobile telecom regulations issued Valuation of licenses, and financial,

technical, and legal due diligence performed

Auction rules and procedures for sale of assets / licenses finalized

Valuation of licenses – Advisory fees

Financial due diligence – Advisory fees

Technical due diligence – Advisory fees

Publication of RFA in international and local newspapers

Creation of virtual data room

$ 600,000

$ 250,000

$ 600,000

$ 500,000

$ 300,000

$ 2,250,000

Note: All budgetary requirements should be reviewed and endorsed by the Ministry of Finance

7

Strengthen Sector Policy-Making

Capacity

Improve EDL Operational Efficiency

Corporatize and Privatize EDL

1

2

3

Power Sector

A Power Sector Program, structured along three main streams, has been endorsed by all stakeholders – This program is detailed in the Appendix Power Sector Program Milestones

IMC to oversee sector reform created

Policy & Planning advisors to MoEW retained

Electricity Sector Expenditure Review (World Bank) completed

2007 Milestones

National Control Center established

Master Plan & Public Investment Plan for Generation and Transmission completed

2008 Milestones

Advisors to EDL appointed

Auditor for 05-06 accounts appointed

Contract for the supervision of KEPCO awarded

Technical report on viability of Zouk and Jiyyeh plants completed

EDL 2002-2006 accounts audited

NG to Beddawi plant committed

220kV grid rehabilitated

400kV Ksara substation expanded

Consultant to HCP appointed Energy Regulatory Authority created Power meters BOT contracted EDL Asset Register completed Additional capacity in Deir Ammar contracted

through IPP

EDL restructuring plan approved by CoM

EDL corporatized (unbundled into subsidiaries for generation, transmission and distribution)

EDL bylaws approved by CoM

Management of distribution privatized

Note: Detailed program (in Appendix) agreed by MoEW, EDL, MoF, HCP, and CDR

8

Strengthen Sector Policy-Making

Capacity

Improve EDL Operational Efficiency

Corporatize and Privatize EDL

1

2

3

Power SectorPreliminary issues have surfaced while implementing short term initiatives

Power Sector Short Term Initiatives Progress and Issues

Qualified advisors at the Ministry of Energy and Water to support on strategic planning and evaluation of electricity policy reforms selected (contract negotiations currently underway)

EDF hired and financed by AFD to develop a Master Plan for power sector generation & transmission

Progress on Short Term Initiatives Issues

Auditor appointed for EDL 2002-2006 financial accounts – Auditors started working on 2002-2004 financial accounts

Consultancy team at EDL to perform operational, financial, accounting, legal and contract management activities selected (contract negotiations currently underway)

Need to formalize KEPCO (BDL rejected EDL’s request to open LC, which has been resent to MoF)

Need to hire supervision company for KEPCO Need to shift focus of auditors to EDL’s 2005-

2006 accounts (or have them work in parallel on 2002-2004 and 2005-2006 accounts)

Candidates for staffing the Electricity Regulatory Authority are being interviewed

Contract signed with CRA to tender the installation of remote meters

Contract signed with IFC for attracting IPP to install additional capacity at Deir Ammar and investigate sale of plant

9

Short-term transport sector priorities were discussed with the Minister, after meeting with the main stakeholders – A roadmap to implement these is being developed

Transport Sector

Transport Sector Progress

GR PCO met with Transport sector key stakeholders (Minister of Transport, Former Director General of the Ministry of Transport, Civil Aviation Director General, and Port Authority President)

Transport sector priorities were agreed upon with the Minister of Transport:

– Airport privatization: Need to start preparing for the BRHIA privatization (e.g., concession or sales of assets), while establishing the CAA

– Ports expansion and corporatization: Need to corporatize Beirut and Tripoli ports – Tripoli port might represent less

challenges for corporatization

Need to consider expansion of both ports through private sector involvement

Next steps consist in developing a roadmap for the prioritized activities, to be agreed upon by all stakeholders (Minister of Transport, HCP SG, Civil Aviation DG, Port Authority DG, and MoF)

10

The CDR is working on enhancing its internal capabilities and developing a Public Investment Plan

CDR

Develop Public Investment Plan

2 A task force has been created and includes CDR, Ministry of Finance, and the Office of the

President of the Council of Ministers The mandate of the task force is to develop a Public Investment Program (PIP) The task force is expected to work under the following guidelines:

– The Public Investment Plan should have a specific financial ceiling (defined by the MoF)

– The investment program should be in-line with the National Land Use Plan

– The investment program should ensure sector management capacity (e.g., capacity to maintain the asset), as well as, achieve cost recovery

CDR Programs and Initiatives

Enhance Internal Capabilities

1 Strengthen CDR’s procurement, financial management and legal functions capabilities:

– CDR is planning to launch soon the process of filling job vacancies for its existing organizational structure

– CDR will continue making use of foreign grants to contract consultants until all open position are filled

Streamline related internal processes from bid and terms of reference preparation to contracts management and disbursement:

– CDR relies on the policies internationally adopted for its internal procurement processes, which vary according to the funding party requirements

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Going forward, Natural Owners should resolve pending issues, finalize short term budget requirements, and endorse Paris III Commitment Documents

Actions Required Telecom Sector:

– Appoint Liban Telecom Board in order to proceed with the corporatization process (in the interim, PMO member would be reporting to the Steering Committee)

– Finalize legal decision on whether to sell or lease the mobile assets, when issuing new licenses (Follow-up on Ministry of Justice for final verdict)

– Transfer relevant documentation and information from the Ministry of Telecom to TRA

Power Sector:

– Develop and finalize Power Sector detailed workplans for short-term initiatives

– Formalize KEPCO contract

– Initiate auditing of EDL’s 2005-2006 financial accounts

Transport Sector:

– Align key stakeholders on a roadmap for implementing priority programs

Agree on CDR short-term initiatives, develop and finalize their detailed workplans

Review and approve funding and TA requests, and finalize short term requirements Endorse Paris III Commitment Documents (Natural Owners)

Next Steps

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A third IMC meeting should take place to finalize programs, timelines, KPIs and funding, with steady-state implementation progress reporting starting end of August

IMC Engagement Schedule (May – August 2007)

Appoint Secretary to the IMC and agree on his/her role

Review progress, and resolve escalated issues

Review initiative and program allocation, and resolve overlaps

1st Infrastructure and Privatization IMC: 15 May 2007

First Round of

IMC Meetings

Meeting Objectives Dates

Follow up on 1st round of IMC meetings

Endorse initiatives and program allocation

Endorse cross ministerial initiative teams

Resolve escalated issues

2nd Infrastructure and Privatization IMC: 5 July 2007

Second Round of

IMC Meetings

Follow up on 2nd round of IMC meetings

Review and approve natural Owners funding/ TA requests

Endorse Paris III Commitment Documents (Natural Owners)

3rd Infrastructure and Privatization IMC: 22 August 2007 (tentative)

Third Round of IMC Meetings

Next Steps

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Appendix

IMC Issues Register

Telecom Sector

Power Sector

Transport Sector

CDR Programs

Other HCP Programs

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Liban Telecom corporatization is still delayed due to lack of proper governance structure – Mobile sector privatization is still awaiting the outcome of legal consultations on assets transfer

Infrastructure & Privatization IMC Issues Register

Issue ID

Issue Level Issue Description Raised by Date Assigned

to Actions Needed Deadline Status

001 HNeed to appoint Liban Telecom Board of Directors or alternative governance structure

Minister of Telecom/ HCP SG/ BAH

15/05/2007 Minister of Telecom

The appointment of a Board would need 1.5 month

PM and Minister of Telecom to become permanent members of the Steering Committee

MoT to assign PMO Members, who will report to the Steering Committee

30/06/2007

18/05/2007

18/05/2007

Delayed

Completed

Delayed

002 HNeed to finalize the decision on whether to sell or lease the mobile assets when issuing new licenses

TRA Chairman/ HCP SG/ BAH

15/05/2007

Minister of Telecom

Minister of Telecom

Dept. of Legal & Legislation Matters

HCP SG

Legal consultation documents developed by HCP and TRA advisors to be sent to the Minister of Telecom

Minister of Telecom to review legal consultation document internally

Minister of Telecom to transfer the file to the Department of Legal and Legislation Matters at the Ministry of Justice which will decide if the assets can be sold under the current Privatization Law

Citigroup/JP Morgan to proceed and accelerate development of tender documents

23/06/2007

30/06/2007

31/07/2007

On-Going

Completed

Completed

In Progress

On-Going

IMC Issues Register

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A Power Sector Program has been endorsed by all stakeholders – Key transport privatization initiatives have been identified by the Minister of Transport

Infrastructure & Privatization IMC Issues Register

Issue ID

Issue Level Issue Description Raised by Date Assigned

to Actions Needed Deadline Status

003 H

No consensus on approach for power sector reform: In-house reform vs. corporatization with Quick Wins

BAH 15/05/2007

Minister of Energy and Water / EDL / HCP

Achieve consensus on the power sector reform program

Options related to the CRA contract and the corporatization process to be clarified

Power Sector Program to be endorsed by the Infrastructure & Privatization IMC

13/06/2007

18/06/2007

05/07/2007

Completed

Completed

In Progress

004 H Doubts about the approach for Deir Ammar IPP structure

CDR President 15/05/2007

Not Applicable

The Prime Minister insisted on the need to proceed with an IPP for additional generation capacity with an option to include the current capacity

Completed

005 H

Strategy relating to privatization of other public entities (e.g., airport, ports, tobacco) still under development

Minister of Transport / Minister of Finance

15/05/2007

Minister of Transport/ HCP SG

GR PCO

GR PCO

Minister of Transport/ HCP SG

Minister of Transport and HCP SG to meet in order to define sector privatization priorities, with support of GR PCO

GR PCO to meet with Ministry of Transport DG, Port Authority President and Civil Aviation DG to get input on privatization options

GR PCO to present transport privatization options to Minister of Transport

Align transport sector stakeholders on privatization roadmap

25/05/2007

26/06/2007

04/07/2007

31/07/2007

Completed

Completed

Completed

In Progress

IMC Issues Register

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Appendix

IMC Issues Register

Telecom Sector

Power Sector

Transport Sector

CDR Programs

Other HCP Programs

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Telecom Sector – Program Charter 1

ResourcesRequirements Description

Technical Assistance

Management consultants to assist TRA in mapping existing MoT regulatory processes

Management consultants to design new processes

Budget

Ministry Team

TRA Board MoT Director General of Operations & Maintenance MoT Director General of Equipment & Construction MoT OSB Director

Key Risks MoF or MoT might not approve TRA budget CoM might not allocate budget on time CoM might delay financial and organizational decrees issuance MoT might delay the transfer of responsibilities to the TRA

KPIs

[To be developed at a later stage]

Milestones and Key Deliverables TRA Board appointed TRA budget approved and transferred TRA financial procedures approved by ministers of Telecom and Finance Documentation transferred by MoT Information regarding current regulatory functions and relevant material

transferred by MoT TRA functions fully staffed

Program Objectives/Description Establish the TRA to regulate the telecommunications sector Achieve a competitive telecommunications market to deliver state-of-the-

art services at affordable prices to the broadest spectrum of the Lebanese population

High Level Work Plan Create the Telecom Regulatory Authority and appoint its board Issue decrees to facilitate operations of TRA Transfer regulatory responsibilities to the TRA Draft telecom policy outlining the liberalization path to be followed

Program Owner Minister of Telecom

Key Stakeholders Council of Ministers, TRA, MoF

Program Title Establish the Telecom Regulatory Authority

Program Number TEL-001

Telecom Sector

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List of Programs and Initiatives

Telecom Sector – Summary of Paris III Programs and Initiatives (Charter 1)

Sector Programs and Initiatives Stakeholders Preliminary Timeline Implem. Comments1.Establish the Telecom Regulatory Authority

1a.Create the Telecom Regulatory Authority and appoint its board

MoT, CoM Q1 2007 S Completed TRA lacks resources

1b. Issue decrees to facilitate operations of the TRA MoT, TRA, CoM Q1 2007 – Q4 2007 S Some decrees issued, and

other in progress1c. Transfer regulatory responsibility and functions to

the TRAMoT, TRA Q2 2007 – Q3 2007

S In progress Documentation/ Information

transfer process is slow1d.Draft telecom policy outlining the liberalization path

to be followedTRA, MoT*/ OSB(1) Q2 2007 S

In progress

Natural Owner S: Short term M: Medium Term L: Long TermIMPLEMENTATION:XXX

Telecom Sector

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Budget Budget from Paris III*: $ 1,050,000(*) Excluding implementation advisory support and

privatization

Ministry Team

Director General of Operations & Maintenance Director General of Equipment & Construction OSB Director

Key Risks Steering Committee might delay setup of PMO CoM might delay decree issuance

KPIs [To be developed at a later stage]

Milestones and Key Deliverables LT governance structure appointed PMO staffed LT Level 1 appointed LT license issued LT launched

Program Objectives/Description Establish and corporatize Liban Telecom Prepare the ground for privatization, hence creating a more competitive

telecommunications sector, and implementing an important phase of the Telecom Law enacted in July 2002

Program Owner Minister of Telecom

Key Stakeholders Council of Ministers, Liban Telecom Board, PMO, Ministry of Finance, HCP, TRA

Program Title Corporatize Liban Telecom


High Level Work Plan Issue decrees to establish LT and appoint governance structure Setup Program Management Office (PMO) Create LT organizational structure Setup provisional opening balance and prepare asset transfer Capitalize LT by transferring budget Implement business support systems Implement marketing plan Set-up sales outlets Migrate contracts with customers and vendors Create LT brand and establish web presence Migrate employees for LT launch Issue license for Liban Telecom Launch LT

Telecom Sector

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Sector Programs and Initiatives Stakeholders Preliminary Timeline Implem. Comments2.Corporatize Liban Telecom

2a. Issue decrees to establish LT and appoint governance structure

MoT, CoM Q2 2007 S Delayed

2b.Setup Program Management Office (PMO) MoT, Liban Telecom Board*, HCP

Q2 2007 – Q3 2007 S Delayed

2c. Create LT organizational structure MoT, Liban Telecom Board* Q3 2007 S Not started

2d. Set-up provisional opening balance, and prepare asset transfer

MoT, Liban Telecom Board*, HCP

Q3 2007 – Q4 2007 S Not started

2e.Capitalize Liban Telecom by transferring budget MoT, Liban Telecom Board*, MoF

Q3 2007 S Not started

2f. Implement business support systems MoT, Liban Telecom Board* Q4 2007 – Q2 2008 S New ERP system (short) Billing system (medium)

2g. Implement marketing plan MoT, Liban Telecom Board* Q4 2007 – Q2 2008 M Not started

2h.Set-up sales outlets MoT, Liban Telecom Board* Q4 2007 – Q1 2008 L Not started

2i. Migrate customers and vendors contracts MoT, Liban Telecom Board* Q4 2007 – Q1 2008 M Not started

2j. Create LT brand and establish Web presence MoT, Liban Telecom Board*, HCP

Q3 2007 – Q4 2007 S LT Brand (short) Website (medium)

2k. Migrate employees for Liban Telecom launch MoT, Liban Telecom Board* Q3 2007 – Q2 2008 M Not started

2k. Issue license for Liban Telecom TRA, Liban Telecom Board* Q3 2008 M Not started

2m. Launch Liban Telecom MoT, Liban Telecom Board* Q3 2008 M Not started

2n.Privatize Liban Telecom HCP, MoT Q4 2008 L Not started


Note: (*) Liban Telecom Board or temporary governance structuring namely Steering Committee in which the PM and Minister of Telecom are permanent members

Telecom Sector

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Investment banks Financial, legal, and technical consultants International auditor

Budget Budget from other sources: $ 700,000 Budget from Paris III: $ 2,250,000 TOTAL BUDGET: $2,950,000

Team

HCP Secretary general Financial experts Economic experts Legal experts

KPIs [To be developed at a later stage]

Milestones and Key Deliverables Mobile telecom regulations issued Auction rules and procedures for sale of assets / licenses finalized Financial bids received and live auction conducted Termination notice to existing operators sent

Program Co-Owner Secretary General of HCP and TRA Chairman

Key Stakeholders Minister of Telecom, Parliament, CoM

Program Title Privatize mobile telecom


TRA experts

Program Objectives/Description

The privatization of the mobile sector consists in the issuance of two licenses and the sale or lease of related assets

Ensure continuity of service as current management agreements expire on June 1, 2008

Improve service quality Offer a broader variety of services Alleviate public debt and ensuing budgetary deficit Open access to best practice management and operations Create a more competitive telecom sector

Key Risks Lack of coordination from the current operators Parliament not convening

High Level Work Plan Draft and issue regulations (e.g., Interconnection, Competition, Consumer

Guidelines, Universal Services, National Roaming) Perform valuation of Licenses Perform financial due diligence Perform technical due diligence Perform legal due diligence Define and finalize the legal basis for the transfer of ownership of mobile

assets Finalize auction rules and procedures Publish invitation to tender and pre-qualification / qualification criteria Distribute Information Memorandum (IM), and provide data room access and

site visits Review transaction documents based on bidders’ comments, and distribute

revised documents Receive financial bids and conduct live auction Send termination notice to existing operators

Telecom Sector

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Sector Programs and Initiatives Stakeholders Preliminary Timeline Implem. Comments3.Privatize mobile sector

3a.Draft and issue regulations (e.g., Interconnection, Competition, Consumer Guidelines, Universal Services, National Roaming)

TRA Q2 2007S

Issued 3 regulations to-date: SMP, Interconnection, Consumer Affairs

3b.Perform valuation of Licenses HCP, TRA, PCM Q1 2007 – Q3 2007 S TRA to provide input to

investment banks3c. Perform financial due diligence HCP, MoT*/ OSB(1) Q2 2007

S Requires Minister signature Tendering for consultants

underway3d.Perform technical due diligence HCP, MoT*/ OSB(1) Q2 2007 S

Tendering for consultants underway

3e.Perform legal due diligence HCP, TRA, MoT*/ OSB(1) Q2 2007 S In progress

3f. Define and finalize the legal basis for the transfer of ownership of mobile assets

MoT*, HCP, TRA, MoJ, CoM Q3 2007 S Minister will review and

submit document to CoM3g.Finalize auction rules and procedures TRA, HCP, MoT*, CoM Q3 2007

S HCP (Assets) and TRA

(Licensing) Not started

3h.Publish invitation to tender and pre-qualification / qualification criteria

TRA, HCP Q3 2007 S Not started

3i. Distribute Information Memorandum (IM), and provide data room access and site visits

HCP, TRA, MoT Q3 2007 S Not started

3j. Review transaction documents based on bidders’ comments, and distribute revised documents

HCP, TRA Q3 2007 L Not started

3k. Receive financial bids and conduct live auction HCP, TRA Q4 2007 L Not started

3l. Send termination notice to existing operators MoT, CoM Q4 2007 L Not started


Note: (*) MoT denotes the Minister of Telecommunications; (1) Owner Supervisory Board

Telecom Sector

23

Appendix

IMC Issues Register

Telecom Sector

Power Sector

Transport Sector

CDR Programs

Other HCP Programs

24


Power Sector – Plan Agreed by Stakeholders (cont’d)

Sector Programs and Initiatives Stakeholders Preliminary Timeline Timing Comments1.Strengthen sector policy-making capacity

1a.Set-up an Inter-Ministerial Committee (IMC) to oversee sector reform

PM, CoM Q2 2007 S Completed

1b.Appoint qualified advisors at the Ministry of Energy and Water to support on strategic planning and evaluation of electricity policy reforms

MoEW/EDL, CDR Q2 2007 – Q3 2007

S

Terms of reference prepared and endorsed

Committee in CDR to evaluate the applications

Contract negotiations currently underway

1c. Complete Sector Expenditure Review with World Bank support

MoEW/EDL, CDR Q3-2007 – Q4 2007 S

1d.Establish a National Control Center to properly dispatch EDL’s generation and transmission system

CDR, MoEW/EDL Q2 2007 – Q4 2008M

AREVA hired

1e.Hire consultants to develop a Master Plan for the Power Sector, including a Public Investment Plan for generation and transmission, and to review least-cost investment needs and supply options

MoEW/EDL, CDR Q2 2007 – Q3 2007 S

M

EDF hired and financed by AFD to undertake Master Plan

11 months to complete the PIP (according to EDL)

1f. Assess the feasibility of increasing hydro-electrical production

MoEW Q1 2008 – Q2 2008 L

1g.Prioritize investments in transmission and distribution according to the findings of the Sector Expenditure Review and the Electricity Master Plan

MoEW/EDL Q4 2008 – Q2 2009

L

CDR is negotiating with EDF the update of the 1995 Master Plan for the distribution sector in Greater Beirut (45% of subscribers)

Natural Owner S: Short term M: Medium Term L: Long TermTIMING:XXX

Power Sector

25



Sector Programs and Initiatives Stakeholders Preliminary Timeline Timing Comments2. Improve EDL operational efficiency

2a.Appoint consultancy team at EDL to perform operational, financial, accounting, legal and contract management activities, including coordinating and assisting the HCP and its advisory team in the corporatization and privatization of EDL

MoEW/EDL, CDR Q2 2007 – Q3 2007

S

Terms of reference prepared and endorsed

Committee in CDR to evaluate the applications

Contract negotiations currently underway

2b.Formalize KEPCO contract MoEW/EDL Q2 2007S

BDL rejected EDL request to open LC

Request resent to MoF2c. Award contracts for the supervision of the KEPCO

O&M activities for Beddawi and Zahrani plantsMoEW/EDL Q2 2007 S

2d.Decide on the viability of the Zouk and Jiyyeh plants, and rehabilitate viable existing power plants

MoEW Q3 2007 – Q4 2007S

Decide whether to undertake the study with World Bank or independent consultants

2e.Complete the expansion and rehabilitation of the 220KV transmission network

EDL, CDR Q1 2007 – Q2 2008

M

Four specific issues to be addresses (e.g., strings in Mansourieh, touristic area in Ghineh, etc.)

2f. Complete the auditing of EDL financial statements from 2002 to 2006

MoEW/EDL, MoF Q2 2007 – Q2 2008 S

S

M

Auditor appointed for 2002-2006 financial accounts

Started auditing 2002-2004 Need to initiate auditing of

EDL’s 2005-2006 financial accounts


Power Sector

26



Sector Programs and Initiatives Stakeholders Preliminary Timeline Timing Comments2g.Reduce illegal network connections and enforce

bill collection through support from security forces and the Justice department

MoEW/EDL, Ministry of Interior, MoJ

Q2 2007 – Q4 2008

M

Automatic meters would allow to identify easily the illegal network connections, and to manage efficiently the receivables

Enforcement would require the support of Security Forces, Lebanese Army, as well as fast response from Justice department

2h.Review and modify (if needed) restrictive oil specifications based on 2003 study (if highlighted in 1b. study)

MoEW/EDL Q4 2007 – Q1 2008

M

Libnor study of 2003 Negative political impact due

to environmental considerations

2i. Agree on the scope for gas pipeline to connect Zahrani and Beddawi plants (as defined in 1b.)

MoEW Q4 2007 – Q1 2008 M Subject to availability of

Natural Gas supply2j. Improve procurement process of fuel and gas oil,

to ensure better quality and reduce high premiumsMoEW, MoF Q2 2007 – Q4 2007 S

2k. Examine the supply of Liquefied Natural Gas to the Zahrani plant

MoEW Q2 2007 – Q3 2008 M

2l. Commit the supply of Natural Gas to the Beddawi plant

MoEW Q1 2008 – Q2 2008

M

Contract signed with Egypt, with opportunity to double

Gas would arrive in Q2 2008 to Deir Ammar plant

2m.Complete the infrastructure needed for the Ksara station (including 400 KV network) to allow Lebanon’s integration into the regional electrical network known as the “Seventh Joint”

EDL, CDR Q1 2007 – Q1 2008

M


Power Sector

27




Sector Programs and Initiatives Stakeholders Preliminary Timeline Timing Comments2n.Review EDL tariff structure MoEW/EDL, CoM Q1 2009 – Q4 2009

L

Several studies are available such as the EDF tariffs study and NERA tariffs study (2003)

Tariff review has a negative political impact: CoM took decision to increase fixed tariff in 2003/2004, with limited success

Power Sector

28



Sector Programs and Initiatives Stakeholders Preliminary Timeline Timing Comments3.Corporatize and privatize EDL

3a.Retain consultants to assist the HCP with the corporatization and restructuring of EDL

HCP, MoEW/EDL, CDR Q2 2007 S

3b.Establish the Electricity Regulatory Authority and define its financial and organizational structures

MoEW, HCP, OMSAR, CoM Q2 2007 – Q1 2008 S On-going, currently

interviewing candidates3c. License private companies to install and operate

remote metersMoEW/EDL, HCP Q2 2007 – Q4 2008

S

Contract signed with CRA to tender the installation of 16000 pilot remote meters and manage the distribution network

3d.Launch tender for service contracts for distribution MoEW/EDL, HCP Q2 2007 - Q3 2008S

Contract signed with CRA to solicit private sector participation in distribution

3e.Develop additional generation capacity through IPP: Install additional capacity in Deir Ammar with private sector participation

HCP, MoEW Q2 2007 – Q4 2007

S

Contract signed with IFC on 15 June 2007 for attracting IPP to install additional capacity at Deir Ammar and investigate sale of existing plant

3f. Undertake asset registration and valuation of EDL’s assets

HCP, MoEW/EDL Q4 2007 S

3g.Determine organization structure, job description, and compensation and benefits scheme

HCP, MoEW/EDL Q3 2007 – Q1 2008 M

3h.Conduct the legal due diligence to address any issues relating to the corporatization and restructuring process

HCP, MoEW/EDL Q4 2007M

3i. Establish New EDL and draft its bylaws HCP, CoM, ERA Q1 2008 M


Power Sector

29



Sector Programs and Initiatives Stakeholders Preliminary Timeline Timing Comments3j. Transfer selected assets and liabilities to New

EDLHCP, MoEW Q3 2008 L

3k. Appoint the Board of each entity of New EDL group of companies

CoM, MoEW, HCP Q3 2008 L

3l. Privatize New EDL entities through sale of up to 40% of shares to strategic investor

HCP, MoEW, CoM Q1 2009 L


Power Sector

30

Appendix

IMC Issues Register

Telecom Sector

Power Sector

Transport Sector

CDR Programs

Other HCP Programs

31


Transport Sector – Summary of Paris III Programs and Initiatives

Sector Programs and Initiatives Stakeholders Preliminary Timeline Implem. Comments1. Improve Air Transport Sector

1a.Build additional radar to cover North of Lebanon MPWT, DGCA Q3 2007 – Q2 2008

1b.Enhance Security in Beirut International Airport MPWT, DGCA Q3 2007 – Q1 2008

1c. Restructure and privatize Free Zones at Beirut International Airport

MPWT, DGCA, CoM, Parliament

Q3 2007 – Q3 2008 No Free Zone law currently exists

1c. Appoint CAA Board of Directors MPWT, CoM Q3 2007 To be reviewed in light of Airport privatization roadmap

1d.Setup BIAC and appoint Board of Directors MPWT, CoM Q3 2008 To be reviewed in light of Airport privatization roadmap

1e.Privatize BIAC HCP, MPWT Q4 2008 – Q4 2009 To be reviewed in light of Airport privatization roadmap

2. Improve Maritime Transport Sector

2a.Develop Maritime Transport Policy MPWT Q1 2007 – Q3 2007 Draft policy prepared and ready to be circulated

2b.Establish a Maritime Transport Authority MPWT, CoM Q1 2007 – Q3 2007 Draft law for the authority prepared

2c. Clarify the functions of Port administrations MPWT Q2 2007 – Q3 2008 In progress

2d.Develop an investment program for Ports of Beirut and Tripoli

MPWT Q3 2007 – Q2 2008 Expansion of Port of Beirut to the North and Port of Tripoli is under study

2e.Develop an IT platform for trade, freight, customs, and regulatory purposes

MPWT Q2 2007 – Q3 2008 Transport Trade and Facilitation Committee revived

2f. Privatize Ports of Beirut and Tripoli HCP, MPWT Q4 2007 – Q4 2009


Transport Sector

PRELIMINARY

32


Transport Sector – Summary of Paris III Programs and Initiatives

Sector Programs and Initiatives Stakeholders Preliminary Timeline Implem. Comments3. Improve Land Transport Sector

3a.Develop Land Transport Policy MPWT Q1 2007 – Q3 2007 Draft policy prepared and ready to be circulated

3b.Establish a Land Transport Authority MPWT, CoM Q1 2007 – Q3 2007 Draft law for the authority prepared

3c. Revise licensing and enforcement framework for urban and intercity passenger transport services

MPWT Q1 2007 – Q2 2008 In progress

3d.Establish logistics terminals to enhance distribution of goods

MPWT Q1 2008 – Q1 2009

3e. Implement a bus-based collective rapid passenger transport system for the Greater Beirut Area

HCP, MPWT Q4 2007 – Q3 2010

3f. Initiate the reconstruction of the railway section between Port of Tripoli and the Lebanese Syrian border

MPWT Q1 2007 – Q1 2010 Engineering design of railway section completed with the specifications and bill of quantities

3g.Establish pedestrian overpasses MPWT Q1 2007 – Q1 2008 Ask Dr. Tamam Naccache and Youssef Salam

3h. Introduce performance-based maintenance contracts for road maintenance and rehabilitation

MPWT Q4 2007 – Q4 2008

3i. Privatize OCFTC HCP, MPWT Q4 2007 – Q4 2008


Transport Sector

PRELIMINARY

33

Appendix

IMC Issues Register

Telecom Sector

Power Sector

Transport Sector

CDR Programs

Other HCP Programs

34


CDR – Summary of Paris III Programs and Initiatives

Sector Programs and Initiatives Stakeholders Preliminary Timeline Implem. Comments1.Restructure CDR’s capacity to undertake

reconstruction & development capital investments1a.Strengthen the capacity of CDR’s procurement,

financial management and legal functionsCDR Q1 2007 – Q4 2007 S CDR is planning to launch

soon the process of filling job vacancies for its existing organizational structure

1b.Streamline related internal processes from bid and terms of reference preparation to contract management and disbursement

CDR Q1 2008 – Q4 2008 L CDR relies on the policies internationally adopted for its internal procurement processes

2.Develop Public Investment Plan2a.Develop a Public Investment Plan (PIP) CDR, MoF, Office of PCM Q3 2007 – Q4 2008 S A task force has been

created and includes CDR, MoF, and the Office of PCM

The role of the task force is mainly to develop a Public Investment Program (PIP)

The task force is expected to work under the following guidelines:

– PIP should have a specific financial ceiling

– The investment program should be in-line with the National Land Use Plan

– The investment program should ensure sector management capacity, as well as, good cost recovery


CDR

35

Appendix

IMC Issues Register

Telecom Sector

Power Sector

Transport Sector

CDR Programs

Other HCP Programs

36


Higher Council for Privatization – Summary of Paris III Programs and Initiatives

Sector Programs and Initiatives Stakeholders Preliminary Timeline Implem. Comments1.Privatize other public entities

1a.Develop and administer Private-Public Partnership (PPP) Law

HCP, Parliament Q3 2007 M Passed by CoM, in June

2007 1b.Privatize Beirut port silos HCP, MoET L

1c. Privatize water and waste water sectors through concessions

HCP, MoEW L

1d.Privatize Government holdings in tobacco manufactories

HCP, MoF L

1e.Privatize Government holdings in non-productive refineries

HCP, MoEW L


HCP